When Regulators Don't

The health care industry trumps the insurance commissioner.

It's a well-established principle of the American health care system that you get what you pay for and that the ever- increasing gap between the quality of health care available to those who can afford the best and those who can't is wider than in any other Western democracy.

Beth Berendt: "The politicians are afraid."

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Even so, it came as a shock last summer when local providers, including Virginia Mason Medical Center and clinics like Seattle Medical Associates and MD(+2), became among the first in the country to launch what are known as "boutique" services: essentially, paying an annual fee to be able to see your doctor whenever you want. Think of them as retainers, or the seat-licensing schemes of the medical world.

A great furor erupted among people who thought this was taking health care's class war too far. It's bad enough that the pricing of health care is insane regardless. Now Virginia Mason and others seemed to be launching an airline model of customer service: first class passengers over here; over there in coach, tuck your knees under your chin and enjoy your miniature pretzels for wellness. If you can find a doctor at all.

But fairness in access to health care wasn't the only issue—so was legality. Under Medicare, critics charged, patients paying a fee for access were essentially paying double for the same service. The state insurance commissioner's office held a public forum in Seattle last August, and local media ran countless stories on the issue. Local clinics organized for the forum, trotting out patients who averred how they loved being able to see their doctor. But satisfied customers aren't the issue; double billing is, and, more broadly, so is the creation of a tiered health care system. And even though the state's dozen or so boutique programs are, as one insider critic puts it, "almost certainly illegal," nothing has been done to stop or even regulate them since that forum last summer.

Why? "Very high-powered individuals were saying, 'We're going to take you out.'" So says Beth Berendt, the deputy insurance commissioner who is the Olympia office's lead person on the issue. Berendt says that her office, under Insurance Commissioner Mike Kriedler, withdrew legislation to regulate the boutique plans during this year's legislative session when it became clear that health care providers and the Washington State Medical Association would kill it.

"The problem is that there's not a niche in the state code where they fall neatly," Berendt says. "We don't want to kill [the programs], just assure a reasonable level of regulation." But Berendt has her doubts. Legally, "I think it's very problematic" to charge the extra fees, she says. A clinic providing extra services is one thing; charging a fee simply to avoid being dropped by a physician is another. Berendt cites Medicare as a particularly troublesome issue. An add-on in the new law reforming Medicare apparently allows these types of boutique programs, but no regulations have yet been written to deal with billing procedures. If Medicare decides not to accept the programs, it could be one more instance of physicians simply refusing to see the elderly and disabled population on Medicare. Already, private clinics like Seattle Medical Associates refuse Medicare patients, primarily because Medicare won't pay what they charge.

Berendt is pledging to continue talks with the clinics and the medical association, with an eye toward legislation in the 2005 session. But the issue is a case study of how business interests can trump both the law and public interest. Programs that are considered illegal by some regulators continue today, unchecked and unregulated, because of the power of the business lobby. And in this case, the business—health care—is one in which profit shouldn't be the primary motivating force. Saving and improving lives should be.

"The politicians are afraid to do anything," Berendt says of health care more generally. "I think it's going to require a federal solution—I think the whole system's about to collapse, personally." These are not reassuring words coming from a leading state regulator.

But they're not unusual either, whether in health care or in a variety of other fields where industry pressure trumps the law and the public good: environmental protection, tax code, worker safety, and on and on. Boutique health care programs are just one more example of a regulatory apparatus that no longer regulates.

Our only leverage in the system is to elect politicians who aren't afraid to create, and enforce, laws that serve the public interest.